Thursday, January 11, 2007

Chavez sworn in for radical new term in Venezuela

Venezuelan President Hugo Chavez was sworn in on Wednesday for a new six-year term that he vowed to use to press a radical socialist revolution including nationalizations that have roiled financial markets.Emboldened by his landslide re-election win, the typically combative anti-U.S. leader has gone on the attack, deciding to strip a private opposition TV channel of its license and take over some major companies owned by foreign investors.

"Fatherland, socialism or death -- I take the oath," Chavez said.

The man who calls Cuban President Fidel Castro his mentor changed tradition by draping the presidential sash from his left shoulder instead of his right in what he says is a symbol of his socialist credentials.

Legislators at the ceremony in Congress chanted "Long live socialism."

Investors took fright this week at the leftist drive that further consolidates power in the hands of a former coup leader who already controls Congress, the courts and says he has total support in the army and the giant state oil company.

As the United States criticized Chavez's moves against private property, the stock market lost almost a fifth of its value on Tuesday, debt prices tumbled to a six-week low and the currency changed hands at nearly twice the official rate

Still, buoyed by strong oil revenues and high popularity, Chavez is expected to ride out any economic and political storm.

In his political career, the former army officer has survived jail, a coup and a recall referendum.

A leading anti-U.S. voice in the world and in the vanguard of a shift to the left in Latin America, Chavez now wants to scrap presidential term limits and lead the OPEC nation for decades.

Chavez, who rode to Congress for the swearing-in ceremony in an open-top car waving at crowds of supporters, has said his new term's plans include stripping the central bank of its autonomy and taking on special legislative powers.

The opposition has accused Chavez, in power since 1999, of seeking to transform the fourth-biggest oil exporter to the United States into a Cuban-style centralized economy.

BLANK CHECK FROM VOTERS?

Chavez, who won 63 percent of the vote in December, has amplified comparisons with Castro by creating a single party to steer his revolution, but insists he will always tolerate opposition.

By now focusing on the media and utilities in his new term, he is homing in on two sectors that could complete his state control.

"Chavez interprets the election result as giving him a blank check to develop a program that runs against the interests of Venezuela and only serves to benefit himself," Omar Barboza, a leading opposition official, told Reuters.

Chavez insists he needs more power to save Venezuela from exploitation and even attack by capitalist countries, particularly the United States, whose President George W. Bush he has labeled "the devil."

Chavez's nationalization plans remain hazy and the utilities and foreign investors want to know whether he plans to take a 51-percent governing stake or seize all of their enterprises.

Chavez has already confiscated large cattle ranches. But his decision to nationalize the country's biggest telecommunications company CANTV and power firms represents a bold new policy.

Still, investors have generally stayed in Venezuela while Chavez has been in office because the country has high revenue as one of the world's top exporters.

Investment bank Morgan Stanley said in a research note, "We continue to see oil prices as ultimately the key driver" of investments.